Revenue-sharing proposal reached with First Nations

November 23, 2015 MaryAnn Mihychuk

Manitoba is looking to make up for lost time when it comes to partnering with indigenous communities in mining development.

The buzz at this year’s Manitoba Mining and Minerals Convention was decidedly dialed back this week, with metals prices continuing on the downward trend (nickel prices are off almost 50 per cent in the past 12 months), and capital markets and explorations companies are having a hard time raising money.

The one bright spot in Manitoba is recent advancements in negotiations with First Nations might finally bridge the impasse many have argued was adding undue uncertainty to the industry in this province.

At his annual speech to the industry, Premier Greg Selinger said after lengthy negotiations, a revenue-sharing proposal is about to be made to the Manitoba Mining Advisory Council (MMAC).

“With our First Nations partners, one of the things we are going to do is move to a model where we share the benefits of mineral resource revenue with First Nations and indigenous communities,” Selinger said.

“Details to come.”

Some industry sources say the proposal, scheduled to be presented to MMAC today, could include the province sharing a percentage of the provincial mining tax with First Nations whose traditional territories are being used for mineral development.

Tim Friesen, executive vice-president of the Mining Association of Manitoba, said progress in this area has been encouraging.

“It is a great initiative, and it is going to move the industry forward,” he said. “It is definitely a positive initiative.”

Dave Chomiak, minister of mineral resources, said the negotiations have been going on for a long time.

He would not disclose the particulars, but said, “Once we get it on the table, and if it is accepted, it will set a precedent for all kinds of resource issues in Manitoba.”

That said, Friesen and others know there are many sensitive issues and hard work for the real payoff to occur.

Manitoba came off its weakest exploration year in many years in 2014 with a modest bounce-back this year.

While Chomiak said at the conference Manitoba has the most generous package of incentives in the country, Friesen noted it also has the highest mining tax regime in the country.

In 2014, the value of metals production — nickel, copper, zinc, gold — was down 16 per cent to $1.1 billion, and exploration spending was down 82 per cent.

As poor as the landscape might be, the sector — which included petroleum production ($1.76 billion in 2014) and industrial mining such as quarry rock, sand and gavel ($227 million) — employs about 6,000 people and is an unmistakable driver of the economy in the north.

And there are developments taking place on the ground (and underneath it).

Industry developments:

Despite the depression in the global sector, two new mines opened in Manitoba in 2014, both by HudBay Minerals and both near Snow Lake –Lalor and Reed. Earlier this year, HudBay also acquired the old New Britannia gold mine in Snow Lake. It does not seem likely that mine will be reopened, but HudBay will use the Snow Lake concentrator for Lalor ore and will not have to build a new one there.
In 2010, Vale announced it will be closing its nickel smelter and refinery in Thompson by 2015 because it did not see a business case to invest $1 billion to mitigate sulphur dioxide emissions. But after extensive negotiations with the federal government (with help from the province), it has an agreement in principal with Environment Canada to keep it open until 2019. Vale spokesman Ryan Land said the company is investing in developing its mining and milling operations. He said efforts are being made to transition the 300 to 400 jobs that will be affected by 2019 — out of a total Vale workforce of 1,500 in Thompson — into the rest of the company’s operations.
San Gold went into bankruptcy this year, and the Rice Lake and Hinge mines in Bissett have been shut down. New owners Shoreline Gold Inc. continue to invest in the mine infrastructure and hope to find a buyer.

Most promising projects:

The Monument Bay gold and tungsten project near Red Sucker Lake is now on its sixth owner after Yamana Gold acquired Mega Precious Metals earlier this year. Drilling to date has mapped out about two million ounces of measured and inferred gold, and ongoing project manager, Glen Kuntz, former CEO of Mega, said the development work is continuing.
The Alamos Gold MacLellan and Farley Lake projects at Lynn Lake. These projects have also come under new ownership, with a few twists and turns ending last month when Alamos acquired 100 per cent of the project. With nearly five million ounces of gold mapped out, that project is in the process of producing a feasibility study, often the precursor to a mine development.